• Tuesday, May 21, 2024
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BusinessDay

Naira firms against dollar as independence holiday slows trading activities

Foreign Exchange

Nigeria’s naira on Wednesday firmed against the dollar, gaining N2.33k after exchanging at an average rate of N461.66k from N464 on Tuesday on the black market.

The naira appreciation was attributed to slow trading activities due to the Thursday’s independence holiday declared by the Federal Government.

BusinessDay exchange rate monitor across Lagos State show that black market operators were selling dollar at N458 at the Lagos airport, N463 at Festac Town and N464 at Apapa. However, the traders were buying from individuals at between N460 and N462.

Naira remained stable as the dollar was trading at N465 at the Bureau De Change (BDC) segment of the foreign exchange market.

About 5,000 BDCs funded their accounts on Wednesday but would receive disbursement on Friday instead of Thursday due to the holiday.

Aminu Gwadabe, president, National Association of Bureau De Change Operators of Nigeria (ABCON) told BusinessDay on Wednesday that information on account funding has been shared among the BDCs early enough.

The CBN had changed the dollar purchase days for BDCs to Tuesday and Thursdays from Mondays and Wednesdays.

What this means is that BDCs are going to be funding their accounts on Mondays and Wednesdays. The CBN had in August 27, 2020 circular said the purchase of foreign exchange by BDCs shall be on Mondays, and Wednesdays in the first instance. The BDCs are to ensure that their accounts with the banks are duly funded with the equivalent Naira proceeds on Fridays and Tuesdays accordingly.

The Apex bank sells $10,000 twice weekly to the BDC segment of the foreign exchange market. The banks and financial institutionregulator has sold over $300 million to BDCs since September 7, 2020, when it resumed dollar sells to them.

During its two day meeting on Monday and Tuesday last week, the Monetary Policy Committee (MPC) noted the resumption of sales to the BDC in a bid to improve liquidity and ease demand pressure in the foreign exchange market. Consequently, the exchange rate appreciated at all windows said Godwin Emefiele, governor of the CBN.

The foreign exchange market has witnessed dollar shortages since early this year as a result of sharp drop in oil prices, which accounts for about 90% of the country’s foreign exchange earnings and low inflows from remittances due to the Covid-19 pandemic.

The price of Brent crude, which has fallen to below $20 per barrel in March 2020 is gradually recovering as it stood at $40.80 per barrel as at September 30, 2020.

At the Investors and Exporters (I&E) foreign exchange window, naira signalled marginal depreciation as the market opened with an indicative rate of N386.59k on Wednesday from N386.50k on Tuesday, data from FMDQ showed.

The CBN resumed dollar sales to BDCs on Monday September 7, 2020 and had supplied over $200 million to the BDCs. The Apex bank sells $10,000 twice weekly to this segment of the foreign exchange market.